With a challenge to boost the economic growth along with providing relief to the middle class and those hit by the pandemic, Finance Minister Nirmala Sitharaman is going to present her second full Union Budget on February 1, 2021.
As all individuals eagerly await announcement on income tax benefits under Section 80C and Section 80CCD, there are demands from the senior citizens as well. Severely hit by the pandemic, this year’s budget will be keenly observed by the senior citizens who are expecting rebates, as well as rise in the Income Tax (I-T) exemption limit.
According to the law, a senior citizen is an individual resident between the age group of 60 to 80 years. A super senior citizen is an individual resident who is above 80 years.
Most senior citizens depend on fixed income investments to meet their regular income needs. Bank fixed deposits are mostly the preferred choice of most of them. However, banks FD’s are currently offering a rate of interest of less than 6 per cent per annum across different tenure. The falling interest rates have hit the income of most senior citizens.
The interest earned on saving deposits and fixed deposit with banks or post office or co-operative banks for an amount up to Rs 50,000 by the senior citizen is eligible for deduction under Section 80TTB. Also, there will be no deduction of tax at source up to Rs 50,000. This limit of Rs 50,000 has to be computed for every bank individually.
Hence, the I-T exemption limit has been sought to be raised to Rs 1 lakh for senior citizens from the current Rs 50,000.
“The government should enhance some of the tax breaks, including increasing the exemption limit on interest income for senior citizens so that some portion of their income can be restored,” said KP Saha, retired government employee.
However, many elders are tweeting the finance minister to not charge interest on income from FD’s and savings schemes.
Meanwhile, senior citizens are also expecting the finance minister to announce a full tax rebate on senior citizen saving scheme.
Some senior citizen investment options providing regular income payments include bank fixed deposits, Pradhan Mantri Vaya Vandana Yojana (PMVVY), Post Office Monthly Income Scheme (POMIS), Senior Citizen Saving Scheme (SCSS), Immediate Annuity plans of life insurance companies and Floating Rate Savings Bonds 2020.
The interest income from these investments is taxable in the hands of the investor in the year of receipt.
Current Tax slab for senior citizen aged 60-80 years.
Up to Rs 300,000 - Nil
3,00,001 to 5,00,000 - 5 %
5,00,001 to 10,00,000 - 10,000 + 20% of total income exceeding 5,00,000
Above 10,00,000 - 1,10,000 + 30% of total income exceeding 10,00,000
